College Financial Aid: Critical Advice-Must Read!
In a word, get FAFSA, the free application for federal student aid form used by ALL public and private colleges for federal grants and financial aid. A grant is a gift, the recipient does not have to pay it back, while a loan, is one you do pay back after graduation usually. The FAFSA will ask you to provide income and asset information but does not take into account the value of your primary residence.
If you are attending a private college, fill out the College Board's CSS Financial Aid profile. this is used to determine how to distribute their own funds and uses info that FAFSA does not, like home value of parents, private school tuition for siblings, if attending (if you are paying for that, make sure you list it). If you sold a home in a quick sale, mention it because it could increase your aid package.
If you think your aid package is too little, request a reassessment or professional judgement review and point out investments have taken a financial loss because of the market or that listed assets that cannot be tapped to pay for college. College aid is filled with small things that can make a difference in the aid received.
Start planning for your kids college aid while they are junior in high school because to financial aid, this is the base income year and it counts the most when determining a family's eligibility. Any income earned or assets received in that year are counted heavily than in later years. So if you must sell stocks or other assets, do it before or after the child's junior year! Also, delay converting IRA or Roth IRA because most will consider that income and the same applies to job bonus' that should be postponed until after the junior year. If you plan to buy a car or business, renovate the office etc., do it in the junior year to reduce reported income (must be business related!).
If you own a business, move income from the high tax bracket to low bracket of the child. To do this, parents hire their child to work for the business. The child's income helps reduce the total income taxes of the parent. The child can use the money earned for college expenses. If you have a 529 aid plan, make sure the plan is under the parent name in order to get more college aid. FAFSA weighs the assets of the student more (20%) than their parents(5.6%) To reduce the child's asset value more, parents should roll over custodial accounts into the 529 plan.
If you can only get loans, get a Federal loan, either a Stafford or Parent Plus, provide them regardless of parental income and offer the lowest rates.
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